CHINA: China Races to Get Rich Before It Gets Old

VANCOUVER, Canada (Vancouver Sun), February 20, 2006: China's one-child policy might be backlashing on the economy. In the 1980s and 1990, the restraint on population growth meant that baby-boomers didn't have to provide for younger generations. Today it means that fewer workers will be around in the future to take care of a bulging population of retirees. Is it time to reassess China's approach to family planning ? China must grow rich before she grows old. Helen Qiao, an economist at Goldman Sachs Group, maintains that China's dependency ratio, the number of people too old or too young to work divided by the working-age population, will rise dramatically and reach 50% in 2030. This evolution occurs in all developed nations but might have devastating affects in China. The country might not have time to reach a level of economic development which will enable her to support her aging population. It is also difficult for a nation to get rich once its population has aged. Aging will also put a lot of stress on China's underdeveloped pension system. As government raises taxes to take care of the aged, a shortage of capital will endanger the country's economic development. China is rapidly aging due to the one-child norm put in place since 1979 to limit population growth. When the pre-1978 baby-boomers entered the workforce in the eighties and nineties, they had fewer younger people to support. This demographic advantage contributed to China's extraordinary boom. According to a UN publication, 15% of the economic growth between 1982 and 2000 resulted from the policy of low births. Today experts are warning the Chinese government of the risks related to the policy. The authorities should end the one-child norm and ease migration from rural to urban areas if it wants to avoid a crisis.